Bank of Ghana holds monetary policy rate at 27% at first MPC meeting under Mahama government

The Bank of Ghana kept its monetary policy rate unchanged at 27.0% on 27 January 2025, Governor Ernest Addison announced after the 122nd meeting of the Monetary Policy Committee (MPC), the first since President John Mahama was sworn in on 7 January 2025.

“Under the circumstances, the Committee decided to keep the monetary policy rate unchanged at 27.0%,” Addison said. The decision left the rate at the level set in September 2024, when the MPC cut it by 200 basis points to 27%, and followed a hold at the November 2024 meeting.

FOOD PRICES KEEP INFLATION HIGH

The committee said inflation remained above target mainly because of food prices. “The inflation profile remained elevated, largely driven by food price movements, especially in the last quarter,” Addison said.

The MPC linked the food-price pressures to climate-related factors, including dry spells and the late onset of rains in food-growing areas, as well as weaknesses in supply chains. The 2024 inflation outturn deviated from the central bank's target.

Despite those pressures, the committee said its latest forecasts showed inflation returning to a disinflation path, although it would take longer to reach the medium-term target of 8% plus or minus 2 percentage points. It said the resumption of disinflation depended on fiscal consolidation.

GROWTH AND RESERVES

The committee noted that economic growth in 2024 had been stronger than projected, with positive spillovers to the banking sector. It said the stronger-than-programmed rebuilding of reserve buffers was supporting the stability of the cedi and that external sector conditions should provide an anchor for exchange-rate stability, despite pressure from a stronger US dollar.